How Preneed Funeral Insurance Can Help You Prepare for Funeral Costs

The grief that a family experiences after the loss of a loved one often makes it difficult to return to life as it was. To help combat this, you can preplan a funeral for yourself or another family member.

Whether you’re thinking ahead about your own legacy or have recently lost a loved one, it’s important to consider the costs that come with planning a funeral. With preneed funeral insurance, those financial burdens can be significantly reduced. 

Quick Links:

• Why Preparing for Funeral Costs Matters
• How Much Does a Funeral Cost?
• Decisions You’ll Need to Make for a Funeral
• What is Preneed Insurance?
• 3 Steps to Help You Financially Preplan Your Funeral
• How Preneed Insurance Can Help You Prepare for Funeral Costs

Why Preparing for Funeral Costs Matters 

Preparing for funeral costs is an essential aspect of financial planning, ensuring that your loved ones are not burdened with unexpected expenses during a difficult time. It can be difficult to think about our own death or the death of a loved one, but planning for it is one of the ways we take care of them. 

Your passing will be emotional for your family, and paying for a funeral can be financially challenging. But by planning ahead, you can alleviate the financial stress on your family, allowing them to focus on grieving and honoring your memory without the added pressure of managing the expenses. 

One notable benefit of preparing for funeral costs in advance is the ability to lock in current prices, which can protect against inflation and rising costs over time. Prepaying for funeral services or purchasing a funeral insurance policy ensures that the necessary funds will be available when needed and at today’s prices, mitigating the impact of future price increases.

Not only is this an important decision for your family’s financial health, but preparing for funeral costs can provide peace of mind for both you and your loved ones. Knowing that the financial aspects are taken care of can give you confidence that your family will not face unexpected expenses. For your loved ones, it means they can focus on supporting each other and celebrating your life, rather than worrying about how to pay for the funeral.

How Much Does a Funeral Cost?

Much like a wedding, the cost of a funeral can vary widely depending on how simple or elaborate it is. As of the latest data in 2023 provided by the NFDA, the median cost of a funeral is $8,300. This is a 5.8% increase since 2021, when the median cost was $7,848. Similarly, the median cost of a funeral with cremation has increased by 8.1% to $6,280 in 2023. 

To gather this data, the NFDA has been reporting on funeral costs in relation to a variety of factors including:

• Basic services fee
• Removal and transfer of remains to the funeral home
• Embalming and body preparation
• Metal casket
• Use of facilities and staff for viewing and funeral ceremony
• Use of a hearse
• Use of a service car or van
• Basic memorial printed package

Simply put, the cost of your loved one’s funeral will largely depend on how you want to celebrate their life and what kind of funeral they want.

Decisions You'll Need to Make for a Funeral

When it’s time to plan for a funeral for your loved one (or your own), it’s important to look at all of your options. Whether you’re thinking about how you’ll want to be remembered or adhering to a loved one’s wishes, you’ll be required to make important choices during the funeral planning process. 

Burial Options

One of the most common funeral choices in the U.S. involves burial. A traditional burial process includes embalming to preserve the body for viewing and interment in either a coffin or a burial vault. While in-ground burials are the most common, you can also consider:

• Above-ground burials in a community mausoleum
• Above-ground burials in a lawn crypt
• Above-ground burials in a private mausoleum
• Natural burials
• Cremations

It’s important to confirm the wishes of your loved one while they’re still living before you proceed with funeral planning. While burials are common, there are plenty of other options that don’t include traditional embalming and viewing. 

Funeral Options

Funeral service providers are expanding their services to help with planning for several alternative funeral options, including:

• Home funerals
• Natural water cremation (AKA resomation)
• Ash scattering ceremonies

Ultimately, it’s best to plan for a unique funeral experience that aligns with the wishes of the deceased. This is why it’s important to personalize your own funeral or your loved one’s funeral.

Personalizing Your Funeral

This process can feel overwhelming. You want to honor your loved one with a beautiful service while also staying within budget and capturing the unique personality of the loved one who has passed. On top of this, the possibilities seem endless. 

It’s best to first acknowledge the deceased’s personal interests. If you’re planning for a loved one, consider what they’re passionate about and what they enjoyed in their life. With that in mind, you can reach out to other family members and friends to get their input.

For example, you can ask them about their favorite memories with the deceased and share ideas about the service, like who to invite, where to host the celebration of life, and the other common funeral elements, like the decorations, the music, and the eulogy. With all this in mind, you can decide on where to hold the service (e.g., church, funeral home) and communicate how you want to personalize specific aspects of the funeral. 

The choices people make for their final arrangements are highly personal and depend not only on cost but also on personal and religious beliefs, family traditions, and ideas about the kind of legacy one wants to leave. An insurance policy can help you make sure that you have the funds you need to host a positive funeral experience, as well as plan for saving funds for your own funeral. 

What is Preneed Insurance?

With all of the things you would like to accomplish when planning a funeral, you’ll be interested to know that several insurance options can help when it comes to covering the cost of a funeral. 

There are two main types of policies that are intended specifically for funeral expenses: preneed insurance and final expense insurance. With preneed insurance, you typically pay a single premium up front and make arrangements in advance with a funeral home. The policy then pays for the products and services you select.

Final expense insurance is sold by an insurance agent and funded by monthly premiums. This type of policy allows more flexibility than preneed insurance, providing funds to cover any expenses associated with the end of your life. 

Beyond the funeral and burial or cremation, these can include a wake or other party to follow the funeral, travel expenses for loved ones, final out-of-pocket medical expenses, or anything else your loved ones need help with.

3 Steps to Help You Financially Preplan Your Funeral

In some cases, you might choose to make funeral decisions beforehand so the burden doesn’t fall on your loved ones. On top of this, you can plan the celebration of life that reflects how you want to be remembered.

1. Determine your funeral budget

While we’ve already mentioned the average cost for a funeral, you’ll need to figure out how much you would like to set aside for your funeral. It’s important to understand that the various components and costs that go into this event can add up quickly. Funeral costs can vary widely depending on how simple or elaborate you would like the service to be.

Here’s a sample breakdown of funeral costs to consider:

• $2,300 Basic services fee
• $2,500 Casket
• $950 Memorial service
• $750 Embalming
• $350 Hearse

2. Select a funeral home

Funeral directors are an important resource for helping you plan your celebration of life. They are there to walk you through everything you can expect in the funeral planning process. They can help you pick a casket, set up a charity fund, source flowers, and arrange everything else you’ll need. By working with a funeral director, you can ensure that you get what you want and what your family needs while staying within your budget.

3. Talk to the funeral home about how to qualify

If you decide that preneed insurance is the right option for you, then the next step is to get your policy. Luckily, you won’t have to worry about qualifying. Most preneed contracts are guaranteed issues, meaning no health questions are asked. However, some companies may offer better rates if you can answer no to certain questions in the application.

How Preneed Insurance Can Help You Prepare for Funeral Costs

A preneed contract is a life insurance policy purchased through a funeral home, which uses the proceeds to fund your funeral. When the insured passes away, the funeral home files a claim with the insurance company. That money is used to cover the costs of the funeral.

In this way, preneed funeral insurance helps you be proactive in keeping the financial stability of your family safe, especially when a loved one passes unexpectedly.

Help Your Family with ELCO Mutual

Essentially, preneed insurance and final expense insurance might be the solution to addressing the high costs associated with funerals. With either of these policy options in place from ELCO Mutual, you can proactively provide peace of mind for your family. To learn more about preneed funeral insurance, reach out to an independent insurance agent today!